August 2, 2015

TPP and self-delusion

Yet the words used to describe the negotiations did not, once again, talk of defeat.

Instead, the joint statement by the TPP Ministers said: “We have made significant progress and will continue work on resolving a limited number of remaining issues, paving the way for the conclusion of the Trans-Pacific Partnership negotiations.”

Yet the hurdles highlighted as sticking points going into the talks proved to be same issues holding up an agreement.

And as Trade Minister Tim Groser said, one of those is the main prize for New Zealand in these talks.

“You can see clearly that there are one or two really hard issues, and one of them is dairy.”

But Mr Groser is nothing if not an optimist, expressing confidence there is a solution that will benefit New Zealand’s dairy farmers and those in countries resistant to opening up their markets, like Canada and Japan.

Mr Groser admits total tariff removal is off the agenda, and he was no mood to give in in Hawaii.

The reporting in Australian media was a bit different. According to them it was their negotiators who held tough and refused to give in. But they also report:

According to industry figures currently in Maui, Hawaii, for talks on the Trans Pacific Partnership Agreement (TPP), the US is not sticking to a position agreed to 18 months ago which was to be the starting point for this round of negotiations.

“When we heard, we were absolutely devastated by it because it put us back so much,” Australian Dairy Council chairman Noel Campbell said.

According to Mr Campbell the US now will not budge unless Canada opens its markets.

So the latest round of talks sounds like it was a huge step backwards, rather than the amazing progress Groser’s trumpeting. And this round was supposed to be the big breakthrough timed to prevent domestic political constraints in various member countries from contaminating the process. There are now so many participants with so many conflicting vested interests that the windows for advancement are very small. Actually, it now looks like those windows don’t exist.

Back when New Zealand signed the Free Trade Agreement with China, Helen Clark admitted it happened because we’re such a small economy. We were China’s first FTA because we were a harmless test-case for them, and we used our small size to our advantage to leverage a good deal. The original TPP arrangement was supposed to work a bit like that. New Zealand and the other signatories – Chile, Singapore and Brunei – would conclude a high quality deal covering off all the big problems in modern trade, and then when other larger economies saw how well it worked we would gradually lure them in.

Why didn’t that happen? One of the main reasons, I suspect, is the hubris of the Trade Minister and the senior staff at MFAT. Tim Groser made a comment the other day about how the TPP talks needed to remain secret from the New Zealand public because it was a task for adults ‘not breathless children’. Groser is very much a product of the culture of elitism at our Foreign Ministery. ‘The finest minds in New Zealand do not go into business or science or medicine,’ MFAT assures itself. ‘They become diplomats. MFAT is the best of the best.’ They’re the Top Gun of the public service, according to themselves. They’re the people who know what’s best for the country. They understand the way the world works. They’re the adults in the room.

Groser takes that self-regard a step further, and seems to think he is the best of the best of the best. World class. A major player of world historical significance. A global titan of international trade. And why should such a man waste his priceless time patching together a deal with the likes of Chile and Brunei? Why not Canada, too? Mexico? Japan? America? Why not put together the greatest trade deal in the history of the world? Why should he do anything less?

Because it isn’t going to work, seems to be the answer. If we had a small, highly successful trade pact and larger economies were negotiating to try and access it, as per the original plan, then we’d be bargaining from a position of strength. Instead we have some of the largest economies in the world dictating terms to us. Groser’s singular genius – whether real or a pathetic self-delusion – is running up against the hard reality that vested interests in those exponentially larger economies simply do not have to give us anything no matter how dazzlingly brilliant our diplomats think they are. We have no leverage – except to walk away, which is something our negotiators will be loath to do because they have so much invested in the process.

We don’t know what the benefits of TPP are – according to MFAT they’re trivial: a couple billion dollars by the year 2025, To put that in perspective, our trade with China is worth about $20 billion a year now and we didn’t have to sign away our own sovereignty to get it. And even if we achieve our big win – access to the US and Japan for dairy – we’re already hitting the environmental limits of our dairy production capability. And there’s a global glut in the dairy market. US farmers are currently pouring their excess milk into abandoned mines.

The best outcome here seems to be failure. The other negotiators realise it isn’t going to work and let the deal fall over, and then we can go back to the original plan of high quality arrangements with comparable economies who we can bargain with in good faith. That was a smart idea.

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This reads like Groser and Key are trying to market refrigerators to the Yupik, Iñupiat and Inuit. They should step away, claim they refuse to sell out to ‘foreigners’, and enjoy the boost in the polls that will result..

You certainly lay it on thick against Groser. Do you know any of this, or is it just your imagination? Because you make him sound like the monster under the bed, so often used to terrify “breathless children”.

@artcroft: as usual Danyl has some insight and interesting commentary on the process, wrapped about an inch thick in “they’re evil baby eating capitalists dontcha know” tirades against people whose motives and competency are obviously suspect because they’re from the wrong political party. Notwithstanding that Labour in power would be doing exactly the same deal in exactly the same way, because it’s how international trade deals are done.

Groser’s grandstanding at the press conference that he “wrote the very first paper” and had “to much invested” in getting a deal to let it go spoke to me of a negotiator who has invested far to much of his own significant ego into getting a deal for him to be trusted to not give away the house just so he can boast to the local press choir of his status as a global genius.

Parking the selling out of our sovereignty by a self-serving global Quisling class (star local member: John Key) I worry about the complete lack of recognition of the environment. I know dairy is what everyone is talking about, but I use Central American beer. Sure, free trade means you can brew a cheap lager in El Salvador, truck it to a wharf, ship it to NZ, and sell it in a supermarket $2 a dozen cheaper than something brewed in Otahuhu all to ensure various someones get to clip the ticket of that $2 of extra profit, and the TPPA is all about making that even easier – lager from Ulan Bator! Why not? But really, how environmentally responsible is that massive fossil fuel overhead to ship it here when we can brew perfectly acceptable cheap lagers anywhere in NZ?

Anyway, Key and Groser should breath a huge sigh of relief at this step backwards. Groser’s technocratic snobbery, the general arrogance of the elites negotiating this deal and the overweaning secrecy means the TPPA has become a political blank canvas on which any fear can be – and has been – successfully broadcast. They’ve comprehensively lost the argument with the public, and will rely on an elite consensus to ram it through parliament. And the last time a government relied on elite consensus to ram something controversial through parliament was Sue Bradford’s arrogantly managed repeal of section 59. And that did not go well for Labour.

Tim Groser made a comment the other day about how the TPP talks needed to remain secret from the New Zealand public because it was a task for adults ‘not breathless children’.

I’m lead to believe this is an unfair retelling. Others weren’t the breathless children, Groser was apparently saying that he and the other negotiators should become not act that way. He wasn’t saying that anyone else was acting that way.

The US, Japan and Canada were NEVER going to open their dairy and meat markets to us and the Aussies. Groser has been on another ego trip, and taken the PM with him. Much like the abortive run at the WTO job.

Aren’t American dairy farmers producing massive surpluses because of subsidies, not because of some global dairy oversupply?

They’re producing surpluses because weather conditions across most of the USA have produced bountiful harvests of crops, which is the core of US dairy farming. Grain silos stuffed to capacity with cheap food.

The overproduction is just the usual supply vs. demand commodity scene where low prices drive production higher in a desperate scramble for money – before it collapses back to “equilibrium”.

China has the same crap going on – except in their case it’s because they’re being paid the equivalent of $NZ 9-11 per kg. It can’t last – but might last long enough to kill a lot of dairying in NZ.

And why should such a man waste his priceless time patching together a deal with the likes of Chile and Brunei? Why not Canada, too? Mexico? Japan? America?

At the risk of defending Tim Grosser – because … well … Tim Grosser – this is a little unfair. The US already was well on the way to joining the full TPP negotiations before Grosser became the Minister. In fact, the possibility of the US (and all the others) joining it was built into the very fabric of the original agreement, with Australia, Peru and Vietam joining it before Grosser took over. Plus it’s hardly Grosser alone who grew it into what it is today – all the parties to it have to agree to letting others in. If NZ had tried to say “no – keep the dirty Mexicans out”, then the question for the other participants would be who would they rather be making a deal with … big economy Mexico or little no-body NZ?

The problems at MFAT go deeper than elitism. Under National it has become the Ministry of Trade for Trade’s Sake, with a foreign affairs department attached to it. In recent years the senior diplomatic corps has been incrementally but relentless purged of seasoned non-proliferation, arms control and human rights experts, to the point that NZ–which as recently as the mid 2000s was invited to participate in the North Korean nuclear disarmament talks–no longer is at the negotiating table as an honest, independent interlocutor when it comes to major non-proliferation or arms control initiatives such as the recently concluded Iranian deal. In their place have been recruited a younger cadre of trade zealots, often graduates of business and economic departments rather than political science and international affairs shops. These people worship at the alter of St.Timothy and share his messianic conviction that markets big and small will clear rationally when linked together in trade compacts such as TPPA. They are either wilfully blind or deliberately ignore the non-trade and domestic (Second Image) aspects of international diplomacy, and with senior personnel with non-trade experience gone from the ranks, there are few in the diplomatic corps who dare challenge St Tim’s orthodoxy (because St Tim, rather than Murray McCully, is the real boss in that Ministry). It will take at least generation to undue the folly of trade zealotry, with the irony being is that, as a German academic demonstrated at the Otago Foreign Policy School last month, New Zealand is not as trade dependent as St. Tim and John Key claim it to be (and is in fact in the middle range of trade as percentage of GDP among OECD countries).

Nearly a decade ago a Cambridge University academic and I wrote a paper titled “Symmetry and Asymmetry in Trade and Security Agreements” in which we noted that the more the actors involved and the greater the size disparities amongst those actors, the smaller the number of issues agreed upon and the less smaller nations benefit from multilateral trade agreements. We also pointed out that issue linkage–that is, the tying of trade and security relationships such as those that characterised the Cold War–continued to be a valid concept in today’s “globalised” system of production, consumption and exchange, but that the balancing of such had gotten more delicate and fragile in the post-hegemonic era in which US unipolarity had been replaced by a multipolar constellation of rising and falling great and not-so-great powers, each vying for its own preferred piece of the world economic pie and each with different notions of “core” national security interests.

All of this may seem obvious but I mention it simply because nowhere in St. Tim and the trade zealot’s approach to world affairs is there even a hint of recognition of the obvious. Therein lies the problem: we are expected to take their religiously market views on faith rather than subject them to critical scrutiny, and when we do subject them to grounded analysis we are treated like heretics and blasphemers.

It is time we remove the ideological extremists from our foreign policy decision making and restore a proper balance between trade, security and other non-trade aspects of diplomatic concern. But for that to occur we will need a change of government and even then I remain less than confident that National’s successors will fully understand the extent of the harm done by the myopic obsession of the trade zealots.

I shall leave for another time the inherent contradiction between trading preferentially with the PRC and other non-Western states and becoming, with the Wellington and Washington Agreements, first-tier military partners of the US. That is akin to straddling a razor wire fence with two bullies pulling our arms in opposite directions.

“…What do you think would have been in the TPP that isn’t in the China-NZ FTA..?”

Hard to know, since its a secret. But generally speaking if you accept that in 2015 the United States is no longer primarily an innovator, creator or a producer of things but instead has become an intellectual usurer, a rent seeker and a possessor then it follows it seeks to extend and lock in it’s usurer, it’s rents and it’s possessions for as long as possible.

@Sanctuary: but that’d be a pretty big premise to accept. Seing that (at least to my mind) the USA is still the largest innovator in the world. Sure, they also have their share of rent seekers, growing all the time. But they’re still an incredibly dynamic and creative culture.

MFAT officials aren’t nearly as arrogant as they used to be; McCully beat them, broke them, made them complicit in his funny little ways, and cleaned out many of the Kelburn civil servant types who laboured under delusions of superiority. These days they’re youngish earnest technocrats, resolute and a bit dim, with rictus smiles of bonhommie, and an automatic flinch reflex whenever you whisper the word ‘Murray’.

If you look at what the USTR was pushing, that other countries have been pushing back on… then yes, it is rents in the form of stricter intellectual property laws than those adopted by other countries.

You lock up intellectual property for too long or too widely, then the pace of economic development slows considerably. That steam engine sits in the corner rather than industrializing Europe. Our system is structured to allow creators to develop something, bring it to market, then enjoy a period of exclusivity. Most countries consider that period to be much shorter than in a system created by lobbyists for large incumbents.

@PaulL: While it’s true that Labour would and did pursue this deal, the Greens wouldn’t, and that’s the party Danyl supports. So he is clear of hypocrisy on this front, at least. (Although the Greens wouldn’t have pursued the China FTA either, even though he seems less opposed to it)

And speaking of the China FTA, I’m pretty sure it does permit restrictions on foreign property ownership – or at least doesn’t explicitly forbid them. You could argue that they’d be against the spirit of the agreement, but given that China famously restricts non-residents from buying property, it’d be a fairly strained argument. (And yes, if somebody’s been following, I do think that restricting non-residents’ right to buy property is a bad idea… just not for this reason)

Riight….so Groser’s “hubris” caused the enlargement of the TPP talks beyond Chile, Brunei, and the original participants.

Hilarious.

Whatever calculations caused the US, Japan, and other countries with a somewhat spotty record on free trade to enter the TPP talks, I’m not convinced it was the persuasive powers of NZ’s Trade Minister.

Ye gods. I’ve seen some deranged arguments about the TPP but this one is a beaut.

Hell will have to freeze over before the G8 agrees to scrap farm subsidies. What used to be a scheme to prevent farmers going under and hence food shortages, has mutated into a bigger corporate welfare scheme than the Wall St bailouts.

@ kalvarnsen: a Green party in govt would be supporting a Labour PM. And a Labour PM would be doing this deal. I didn’t suggest at all that Danyl was hypocritical, just that any alternative govt would have done exactly this same deal in exactly the same way. For the simple reason that you can’t do trade deals in public (it’d be like playing poker with someone standing behind you reporting on the cards you had), and that trade deals are one of the most economically well supported areas of mutual benefit.

The China FTA prohibits restrictions on Chinese investment that don’t apply to other countries. CER prevents us applying it to Australians.

As for sovereignty – actually the deal wouldn’t impact sovereignty. It requires you to pay compensation if you break the terms of the agreement. Firstly, you shouldn’t sign an agreement you don’t intend to keep. Secondly, you can choose not to pay the compensation – given we’re already breaking some other term (for compensation to be payable), why not just break the compensation clause too. Of course, the same as Greece is finding in defaulting on your debts, these things have consequences.

For the simple reason that you can’t do trade deals in public (it’d be like playing poker with someone standing behind you reporting on the cards you had)

A comforting ditty to hum to yourself as you grasp your ankles. Now that the phoney fog of secrecy has vanished in a single puff, Groser the hard-nosed negotiator is revealed as nothing more than a McCully-style shit-eating grin.

Firstly, there is secrecy, and then there is Secrecy. The former is where it is only a secret from everyone for whom knowledge of the secret is unimportant. Everyone in the club is leaked the “secrets”. The latter is sort of secrecy reserved for alien crash sites and other matters of importance for the deep state. It is pretty clear that, say, the Chileans, Canadians and Australians see the TPPA secrecy as the former, whereas Tim Grosser clearly regards it as the latter.

Secondly, there was Grosser’s interview this morning on RNZ. The most remarkable thing about it was he felt constrained to give it at all – clearly someone pointed out to him how hopeless the government’s PR on this has been. But I have to say, Grosser’s continual use of the first person personal pronoun in discussing the TPPA points to an alarming lack of perspective from our chief negotiator.

“Ye gods. I’ve seen some deranged arguments about the TPP but this one is a beaut.”

Didn’t the NBR frontpage Hooton’s positive version of the same yarn just last Friday? That TPP would be a triumph of longterm diplomacy for Groser who, as an MFAT official, cooked up a brilliant plan to get a FTA with the US by kicking off a regional trade negotiation too juicy for them to ignore?

@pascal’s bookie – Hooton’s piece certainly said if it came off it would be a triumph of long term diplomacy, but he gave credit for it to a lot of people – including Helen Clark. It’s a good piece and I highly recommend it.

My comment above was responding to the odd way in which some people – and, more specifically, Danyl’s post – are making this all about Groser’s ego. There’s a lot more important factors at play here.

“My bets were based on the extraordinary, almost preposterous ambition of the TPP. The idea was dreamed up by Dr Smith and his senior officials Tim Groser, Alastair Bisley and Maarten Wevers as a way of drawing the US into a high-quality and comprehensive deal.”

So the idea that the current trade minister might maybe have a bit of ego invested hardly seems like batshit tinfoilhattery. Especially when you listen to him talk.

‘might maybe have a bit of ego invested,,?’ I don’t think anyone is saying he doesn’t. But blaming the continued protectionism of the US, Japan and Canada on his ‘hubris’ – as Danyl, and others are doing?

But blaming the continued protectionism of the US, Japan and Canada on his ‘hubris’ – as Danyl, and others are doing?

Is that fair? I take the point to be more that Grosser’s “hubris” led to the expansion of a manageable proposed trade agreement to a scale where the (entirely predictable and inescapable) continued protectionism of the US, Japan and Canada wrecked it. So rather than coming away with a small but perfectly formed model agreement amongst a handful of small economies, we’ve either got empty hands or an agreement that is so weighted in the favour of big players as to do us harm.

That may still be unfair/inaccurate criticism, but it’s not quite as silly as you make out.

But blaming the continued protectionism of the US, Japan and Canada on his ‘hubris’ – as Danyl, and others are doing?

Why is New Zealand pouring time, effort and money into resolving apparently intractable trade disputes between Japan, the US, Canada and Mexico? That is just an objectively absurd thing for us to be doing. The original plan was a high quality trade deal between four comparably sized economies who could negotiate with each other in good faith and design a ‘frictionless’ pacific trade zone. The TPP is now the opposite of that. What happened? My impression – and it might be wrong and I’m open to alternatives – is that it’s driven by hubris (not just Groser’s, although he’s an exemplar) of our diplomats deciding, post the China FTA (everyone even peripherally involved in that deal seems to have decided that they were the pivotal genius who unlocked China) that they are masters of the universe and that they can and should put together the biggest fucking trade deal in all of human history.

If anyone said ten years ago that New Zealand should focus our trade diplomacy on resolving trade disputes around auto industry issues between Japan the US and Mexico the result would have been mocking laughter. Why on earth would we do that? Yet here we are.

I suspect the symptoms Andrew, Danyl et al are displaying are simply the latest outbreak of a particularly virulent strain of Key Derangement Syndrome by Proxy.

You are confusing description of a position with approval of that position. All I’ve said is what I say others can be taken as saying. Perhaps your extreme eagerness to diagnose KDS(BP) is indicative of a dose of the quite common Avoid An Argument By Labelling Disorder?

That’s my point! Instead of four roughly equal countries with complementary economies trying to negotiate a high quality deal we have twelve wildly unequal economies many of which have huge political powerful industries in direct competition with each other trying to negotiate what sounds like a really low quality deal and failing. The first idea was a good idea and this is a terrible idea. Can’t we ask ‘Why are we doing this obviously stupid thing instead of that really smart thing?’ Seems like a reasonable question.

‘Why are we doing this obviously stupid thing instead of that really smart thing?’

The diplomatic phrasing available to us when big powerful nations intrude tends towards “Oh, that certainly seems like an idea worth considering” and seldom (if ever) towards “Piss off you fat Yank morons”.

I find it amusing that on the one hand Groser is a tool with an ego the size of a planet and no actual negotiating ability. And on the other hand he single handedly got all those major powers to agree to come and join our trade agreement. I suspect the answer is somewhere in the middle. He is a bit of a tool and has a big ego, and he didn’t disagree when others suggested that the US, Japan and Canada might join. But it’s unlikely that NZ is mediating all this and creating the agreement all on our own. Classic case of small country thinking it’s important in the scheme of things.

Then again, Helen Clark would probably have been less likely to sign a blank cheque like Tim Groser seems to be doing.

Tinakori: “latest outbreak of a particularly virulent strain of Key Derangement Syndrome by Proxy” – coming from those diagnosed with a particularly virulent strain of Survivorship Bias Syndrome by Proxy.

@Phil: APEC is all about soft power, though – it’s effectively a glorified talk shop (not that there is anything wrong with that), and it certainly doesn’t try to create binding meso-economic laws for its members.

International negotiations on anything tend to be complex, time consuming and dominated by govts having to placate their own reactionary self interest groups at home while at the same time reaching out for international cooperation.

Expensive new drugs, intellectual property, tax, the miriad of ways technology has changed trade and the concept of sovereignty.

It’s little wonder the negotiations aren’t a smooth ride.

But when would they be? Do we wait for a perfect world before engaging?

“But when would they be? Do we wait for a perfect world before engaging?”

true enough – but when (according to leaked info) the negotiations have had corporates with turn over greater than most nations GDP, rewriting the deal to suit themselves, to the point where they seek a system that can over ride a govts law making ability (even if by threat of litigation alone) then we shouldnt even give them the time of day, untill it gets back to issues of fair and open trade across borders and nothing more.

Now – some may scoff at such a notion – but its happened numerous times already, and been instigated by pretty much the exact same people/groups – nafta being one recent example.

@framu: The problem is, the issues of corporate legal activism and fair and open trade fade into one another. When you start looking at what makes it harder for corporations from country X to operate in country Y than corporations from country Y, it often turns out that corporations from county X have difficulties accessing the legal system in country Y.

Although having said that, it is already possible for foreign corporations to sue the NZ government.

“it often turns out that corporations from county X have difficulties accessing the legal system in country Y.”

thats not really the same as “were going to force you to accept our products into your market” – or “were going to force you to not make laws in your interest because we feel threatened by the idea”

eg: country of origin labelling – many large corporates dont like it, because they know many people like to know where the product comes from and will change buying habits accordingly – but isnt that just the market at work in country Y? If consumers want openness why cant they have it?

untill it gets back to issues of fair and open trade across borders and nothing more.

I doubt it will ever be quite so clear cut. Every country involved has its own domestic lobby groups to placate. That’s not going to change.

But the issues of trade and new technology won’t go away. We can sit back and wait for a set of govts that are prepared to negotiate the way we want but meanwhile the issues remain unresolved.

And given Obama’s record on international negotiations – Iran and now climat change (which along with the TPPA are all opposed by his most reactionary domestic opponents) – now might be as good a time as any.

im fine with domestic lobby groups – its the trans national lobby groups that give me the shits (ie: its the size of the club one can wield that worries me)

to me weve sort of gone beyond nations and their interests trying to reach a consensus (with the required trade offs), to groups with vastly more power and wealth who are beholden to no-one but themselves telling us how its going to be – can we actually resist that? – who knows.

All I know is that Australia is being sued by an Australian tobacco company that is pretending it is a Hong Kong tobacco company, because it has implemented a public health measure to save the lives and wellbeing of hundreds of thousands of its people.

@Groser’s socks: they’re being sued but may not lose, and they could have been sued by an Australian tobacco company for the same thing. Giving international companies the same rights to sue as local companies actually isn’t unreasonable. There were 100 ways to address smoking that didn’t involve plain packaging, and the Australian govt chose to push plain packaging because they ideologically don’t like tobacco companies, rather than choosing a measure that addressed smokers/smoking.

If they actually wanted to stop smokers from smoking, they could just make smoking illegal.

Yes, PaulL, you do have to feel sorry for the poor beleaguered tobacco companies. Legal action taken by the tobacco industry is weird because it claims that plain packaging has little or no effect on sales. If that’s true, what’s the problem?

It’s worth noting that tobacco companies used to complain that they were not allowed to sponsor sporting events, but at the same time they argued that sponsoring sport didn’t have any effect on smoking numbers. In other words, tobacco companies were happy to throw good money after bad advertising their product with no prospect of a return!

[T]hey’re being sued but may not lose, and they could have been sued by an Australian tobacco company for the same thing. Giving international companies the same rights to sue as local companies actually isn’t unreasonable.

This isn’t quite right. While an Australian company can sue the Australian Govt under domestic law, the action being brought by Philip Morris isn’t based on giving overseas companies the same rights as Australian. It instead gives them additional rights that are not available to Australian companies.

So – Philip Morris sued the Australian Govt in the Australian courts over the plain packaging measure and lost (see here: http://www.wipo.int/wipo_magazine/en/2013/01/article_0005.html). Having lost domestically, it then (in essence) sued Australia under a FTA that guarantees overseas investors’ IP rights. An Australian company could not do this.

There’s even a NZ equivalent. Back in 1999, the new Labour Govt banned logging native timber on crown lands (as it promised it would do at the election). A domestic timber company sued the Govt, alleging their property rights were confiscated. It lost in the court (as it would today), which was the end of the story. But if that company were owned by Chinese (or Singaporean, or Chilean, etc, etc) interests, then it could use the ISDS provisions in our FTAs with those nations to gain compensation for any losses caused by our Government’s change in policy.

@Ross: the tobacco companies said that plain packaging wouldn’t change aggregate consumption, but it would change their share of that consumption (i.e. unbranded, smuggled or el cheapo cigarettes would take a big slice). That is what has actually happened in Australia – spend on tobacco has reduced, consumption has gone up. Cost per cigarette has gone down.

Consumption has decreased by 12.8% since the introduction of plain packaging. However, taxes have also increased, so the size of the effect attributable to plain packaging is uncertain. That’s okay. You can do two things at the same time (improve roads and require airbags in cars, for example).

Press releases about research by tobacco companies repackaged as articles indicate that illegally imported tobacco has increased. Customs data and prevalence surveys by independent research institutions show no such thing.

The industry is increasingly desperate in their attempts to explain away a massive decrease in consumption.

The industry is increasingly desperate in their attempts to explain away a massive decrease in consumption.

Precisely.
It also flies in the face of their own their own Annual Reports which over the last decade attribute uplift in both per capita consumption and profits to the developing world where they are still allowed to aggressively advertise.

the developing world where they are still allowed to aggressively advertise

Comparisons between the developed and developing world aren’t starting from the same zero-base.
There’s a really good case to be made that the marginal impact of plain packaging as an addition to all the other anti-smoking campaigns and limits the developed world has in place and the developing world (by and large) does not, is pretty marginal.

Comparisons between the developed and developing world aren’t starting from the same zero-base.

True. But I’m pretty sure that the impact of aggressive marketing can be pretty well measured in terms of sales. Otherwise, why would companies invest in advertising?

Also – if I read your last sentence correctly – there is a only a marginal benefit attributable to plain packaging as an element of cohesive anti-smoking strategies implemented in the developed world, then the tobacco companies wouldn’t be spending an awful lot of time whinging about Intellectual Property rights and threatening lawsuits. Also, given that the companies are bearing all the costs of this change and the benefits (minus tax losses) are all received by the territorial authorities, then even a marginal benefit is positive.

Rather you would think if plain packaging made so little difference to consumption, they would be happy for governments to pursue fruitless measures while they carried on making money.

There’s a difference between it impacting overall consumption, and it impacting consumption _of their brand_. Many people (myself included) believe that packaging of tobacco influences which brand people use, but not how much smoking they do. On that logic the big tobacco companies would be very unhappy about plain packaging, but that doesn’t mean that it must be reducing smoking.

PaulL – I agree that it is the relative slice of the pie that brand impact has.

But think of this as a real estate problem. If 0% of the packet has brand messaging and 100% of the pack has public health / economic messaging (“every cigarette you smoke is $1.50 wasted”), then it’s harder to suggest there might only a market segment impact only given that the efficacy of systematic messaging has been demonstrated – noting that it has been shown to have less of a proportional impact than price sensitivity.